Corporate Social Responsibility and Environmental Management, 2020, 27(2): 485-500.

Impact factor:4.542   

Social trust and corporate social responsibility: Evidence from China

Xiangyu Chen，万鹏（通讯作者）

Abstract

Based on neo-institutional theory, this paper examines whether social trust can influence corporate social responsibility (CSR). Using a sample of 4,209 observations selected from 788 firms listed in China between 2008 and 2015 and adopting an ordinary least square regression, we provide strong empirical evidence showing that social trust is positively associated with CSR. The result supports the view that social trust, as a kind of socially normative force, helps corporate managers safeguard stakeholders' interests by engaging in socially responsible activities. Our result holds after applying a series of robustness tests. We further find the positive relationship between social trust and CSR is more pronounced for state‐owned companies. This paper is one of the first to focus on and examine the relationship between social trust and CSR, and the findings contribute to our understanding of the determinants of CSR and highlight the influential role of social trust in improving CSR.

This paper makes the following main contributions.

First, we offer a new perspective for the study of the influencing factors of CSR. Most of the existing literature has disregarded the societal aspects of CSR in general. Social factors are often treated as a black box by scholars (Brammer et al., 2012). This paper opens the black box to some extent by demonstrating the significant effects of social trust on CSR. Thus, our findings may make contributions to neo-institutional theory by identifying social normative force and by shedding light on how it influences CSR. Meanwhile, this article answers the call for a more extensive inquiry into corporate social actions (Margolis and Walsh, 2003) by analysing how social trust impacts CSR both theoretically and empirically.

Second, this article contributes by adopting an analytical approach based on different regions of the same country rather than conducting a traditional analysis at the firm or national level, thus rendering this work a strong supplement to the CSR literature. Our main focus lies in how CSR behaviour is affected by informal institutional pressures exerted at different regional levels within a country, which may greatly exclude the impact of cultural and institutional differences in existing transnational research.

Third, as far as we are aware, this paper is the first to explore the influence of social trust on CSR, and it complements the emerging literature on the positive effects of social trust by examining the Chinese setting and by focusing on firm-level evidence. Both Zak and Knack (2001) and Hausman (2002) doubted the role of social trust in a less trusting environment. Thus, whether social trust can generate positive effects in China is in itself an interesting question. Our results suggest that even though the overall level of social trust in China is low, it does work effectively in terms of CSR performance.

Finally, while the prior literature provides plenty of evidence to show that social trust can facilitate economic growth and financial market development (Algan and Cahuc, 2010; Guiso et al., 2004; Guiso et al., 2008; Knack and Keefer, 1997; Zak and Knack, 2001), micro firm-level evidence remains limited (Hilary and Huang, 2015). Our results identify the benefits that social trust brings to firms and their stakeholders. Since CSR has a material impact on the welfare of stakeholders, this study is useful in understanding the important role that social trust plays in affecting both corporate behaviour and stakeholder welfare.